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Public companies have 90 days from the end of their fiscal year
to comply. For those with market capitalization of $75 million
or more, this clock starts on Nov. 15, 2004; while all others
with less than $75 million market capitalization begin July 15,
2005.
Fast Relief for Sarbanes Oxley Section 404 Compliance
Section 404 of the Sarbanes-Oxley Act requires management to
confirm the effectiveness of their IT and financial controls in
an "internal control report", which is contained within the
annual report (10-K) issued to the public. But what exactly is
an internal control report, and why is it important to you?
The Section 404 Internal Control Report
First, the internal control report must affirm management’s
responsibility for controls and procedure and, second, it must
contain an assessment of the effectiveness of the internal
controls and procedures for financial reporting. Although both
of these issues might at first appear difficult to solve, they
are actually not as hard as you would think.
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Management’s Responsibility for Controls and Procedures
Affirming management’s responsibility for controls and
procedures means more than to simply say management believes in
or trusts their system. The affirmation will also need to
include a program for a code of ethics for senior financial
officers. The program must include prompt disclosures of any
changes to your ethics program. So how do you do this?
Business Ethics and Compliance Program
You can easily implement a business ethics program using a
step-by-step guide for developing your firm’s business ethics
and compliance program. This manual will save you time
researching, writing and editing your program. It provides
sample policies, surveys, forms and training session outlines
that are fully editable using MS Word. And it is also fully
endorsed by The National Association of Corporate Directors (NACD)
as a tool to maintain a culture of integrity.
Internal Controls
Your internal control report must also contain an assessment of
the effectiveness of your internal controls and procedures for
financial reporting. In practical terms, control is equivalent
to predictability. Everyday management creates forecasts and
budgets to predict the future. And the further into the future
you can accurately predict, then the more control you have.
Forecasts and Budgets
A training class for creating well defined processes shows you
how to attain more control over forecasts and
budgets. Real world exercises and examples
explain how to increase management effectiveness, achieve
process control, communicate clear procedures, and verify if
your processes are working. So what about procedures?
Procedures Effectiveness
For dealing with Section 404 of the Sarbanes-Oxley Act, you can
look at products like the Management CFO Value Series that
includes Accounting, Human Resources, as well as policies,
procedures and forms for other departments. Such procedures will
save you time researching best practices, creating a standard
format, and thinking of clear and concise paragraphs to write.
Easier Section 404 Compliance
Your internal control report is the key to your Sarbanes-Oxley
Section 404 compliance. You should also look at a business
ethics and compliance program, attend a training class for
creating well-defined processes to learn more about management
effectiveness, and use a CFO Management Value Series to speed
the development of your procedures. You want to achieve fast,
easy, and effective relief for your Sarbanes-Oxley Section 404
compliance.
Now read about:
Writing Accounting Procedures... Top 7
Strategies
About the author:
Chris Anderson is co-author of policies and procedures manual
products, providing the layout, process design and
implementation to increase performance. He is currently the
Managing Director of Bizmanualz, Inc., and holds a Masters in
Business Administration from Pepperdine University and a
Bachelor of Science degree in Electrical Engineering from
Southern Illinois University. Visit:
http://www.bizmanualz.com/accounting?src=ART68
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